There was no blogging yesterday because I was in Washington testifying again -- this time at
the House Financial Services Subcommittee on Domestic and International Monetary Policy, Trade and Technology. If you click on the link above, you can access my written testimony, or check out the video, which I think proves beyond a shadow of a doubt that even if fellow witnesses
Brad Setser and
Edwin Truman are way smarter than me, I'm the better dresser.
Patrick Yoest of the Wall Street Journal's Real-Time Economics blog provides a partial summary (the comments to his post are worth a read for entertainment value alone). Apparently I said something newsworthy:
Daniel W. Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, compared the growing role of sovereign wealth funds and foreign investment in the U.S. to the idea of “mutually-assured destruction” between the U.S. and the Soviet Union during the Cold War.
“Mutually-assured destruction can mean a more peaceful co-existence, but it’s a relatively nervous co-existence,” Drezner said.
Drezner added that while interdependence caused by greater foreign investment in U.S. firms “will constrain U.S. foreign policy,” he said foreign holders of U.S. debt would be unlikely to take drastic actions to hurt the U.S.
“They can’t see all of their assets wipe away with the blink of an eye,” Drezner said. “They would be equally devastated.”
One last note -- it's a very strange world we live in when former Fed official Edwin Truman says he agrees with 75% of what renking member Ron Paul says about international monetary policy.
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